Three of four large trade houses that reported results for the quarter ended Sept. 30, 2017, said that sales and earnings in the period were higher than in the same period last year.
The strongest sales performance was turned in by Houghton Mifflin Harcourt’s trade division, where sales were up 11.8%, though earnings were up a more modest 1.5%. The gain at HMH was due to sales of frontlist and backlist print titles, such as The Polar Express, the Little Blue Truck series, and It Takes Two, and strong e-book sales, led by The Handmaid’s Tale.
At HarperCollins, digital revenue was 6% higher in the quarter than in the third quarter last year, driven by sales of downloadable audio. Overall digital sales accounted for 21% of consumer revenue in the quarter, up from 20% a year ago. Total sales at HC increased 3.1% in the quarter, to $401 million. In addition to strong downloadable audio sales, HC continued to benefit from solid sales of Hillbilly Elegy and The Subtle Art of Not Giving a F*ck, as well as of frontlist books including House of Spies and The Good Daughter. Earnings were up 4.1%.
Simon Schuster followed a familiar pattern, posting sales and earnings increases from the third quarter of 2016. Overall, SS reported that sales rose 1%, to $228 million, in the quarter, and operating income increased 4.5%, to $46 million. According to SS CEO Carolyn Reidy, sales of downloadable audio rose about 37%, sales of print books posted gains, and e-book sales fell again. Contributing to the improved results was a good performance by the publisher’s international group: Hillary Clinton’s What Happened had solid sales in Canada, Ireland, and the U.K., Reidy said, and the international division also benefited from foreign sales of Rupi Kaur’s new book, The Sun and Her Flowers.
The only one of the four major publishers reporting results in November that saw a sales decline in the third quarter was Hachette Book Group USA, for which revenue fell 2.8% from the same period in 2016. Parent company Lagardère attributed the decline to strong sales last year of new releases such as Two by Two and Woman of God. Lagardère added that the Perseus publishing properties, which were acquired in March 2016, had a solid quarter.
In a statement, HBG CEO Michael Piestsch said that, despite the sales dip in the third quarter, the company’s revenues through the first nine months of 2017 were ahead of the same period in 2016. He cited growth in downloadable audio sales and a strong performance from the company’s distribution side as high points.
For Lagardère’s publishing subsidiaries overall, sales fell 4.3% compared to the third quarter of 2016, to €646 million. The drop was mainly due to a sales decline in the U.K., which had a huge hit in last year’s third quarter with Harry Potter and the Cursed Child. Despite the third-quarter sales slip, total Lagardère publishing revenue was up 1.2%, to €1.66 billion, for the first nine months of the year over 2016. Sales in the U.S. were ahead 2.2%.
The third-quarter gains at the other houses were not an aberration. HMH trade revenue for the first nine months of 2017 was up 12.1% from the same period last year and earnings were $8.9 million, up from $3.1 million a year ago. SS results were also up through the first nine months of the year. Sales in the period increased 6.6% over the same period last year, to $595 million, and operating income grew 6%, to $88 million. Reidy is optimistic SS will finish 2017 on a strong note and predicted that sales for the publisher—even excluding Adams, which it bought late in 2016—will be greater than in 2016.
Executives at HC parent company News Corp said trends in book publishing remain favorable. They pointed to strong starts in the new quarter for several titles and also expect modest contributions at HC from digital.
Third Quarter, 2016–2017 ($ in millions)2016 2017 Change HarperCollins Total Sales $389.0 $401.0 3.1% EBITDA $48.0 $50.0 4.1% Margin 12.3% 12.5% Houghton Mifflin Harcourt Trade Total Sales $45.8 $51.2 11.8% Adjusted EBITDA $6.5 $6.6 1.5% Margin 14.1% 12.8% Lagardère Publishing Total Sales €675.0 €646.0 -4.3% Simon Schuster Total Sales $226.0 $228.0 0.9% Operating Income $44.0 $46.0 4.5% Margin 19.5% 20.2%